Linear Consulting Sdn Bhd v Coneff Corporation Sdn Bhd (WA-22NCvC-182-04/2023)

The plaintiff has filed an application dated 03-07-2023 [Enclosure 14] for summary judgment under Order 14 of the Rules of Court 2012.

The defendant opposes the application on the following ground [See Enclosure 59 defendant’s Written Submissions paragraph 5 to 21] - The “Appointment as an Asset Monetization Exercise Consultant” agreement was not validly executed under Section 66 of the Companies Act 2016 whereby that the said agreement was only executed by one director from the plaintiff and one director from the defendant notwithstanding that there is more than one director in both the plaintiff and defendant.

I allowed the summary judgment on 06-10-2023 with costs of RM 10,000 subject to allocatur. The defendant is unhappy and filed an appeal to the Court of Appeal on 26-10-2023. These are my Grounds of Decision.

The plaintiff is a consulting company incorporated pursuant to the Companies Act 2016 whereas the defendant is a property developer also incorporated pursuant to the Companies Act 2016. S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 3

By a letter of appointment dated 20-03-2019 (“Letter of Appointment”), the defendant appointed the plaintiff as an Asset Monetization Exercise Consultant. This is stated in the subject heading of the Letter of Appointment. [See Exhibit OCK-2 in Enclosure 13].

Pursuant to the Letter of Appointment, the defendant told the plaintiff the background for its appointment as their Consultant is :- a) The defendant, a licensed property developer, has launched its project known as Residensi Desa Idaman, a mixed development which comprises of 790 units of serviced apartments (2 tower blocks) with an estimated Gross Development Value (GDV) of RM382,000,000.00 as well as retail lots on the Ground and First floors. [See clause 1] b) The defendant now wishes to sell up to 50% of its 790 units of its serviced apartments to MyAngkasa Bina Sdn Bhd (“MABSB”) on an En-Block basis with terms to be negotiated. [See clause 3] c) The plaintiff shall assist the defendant to negotiate and secure the agreement of MABSB to purchase approximately 50% of its 790 units of its serviced apartment in Residensi Desa Idaman. d) The plaintiff shall be deemed to have successfully completed Part 1 of its scope of work once the plaintiff procures a formal letter of approval from MABSB to purchase approximately S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 4 50% of the 790 units of serviced apartment in Residensi Desa Idaman from defendant. e) The parties further agreed that the plaintiff shall be entitled to a success fee of 3% of the total GDV of the units committed by MABSB. f) The sum of RM 150,000.00 shall be due upon the plaintiff completing Part 1 of its scope of work. g) The sum of RM 1,282,500.00 shall be due (being 25% of the total success fee less the RM 150,000.00 paid above) upon signing of the off-take agreement between MABSB and the defendant.

The plaintiff completed the scope of work under Part A, Clause 1 of the Letter of Appointment upon procuring a formal letter of approval dated 08-05-2019 (“Letter of Approval”) from MABSB to enter into an off-take agreement with the defendant. For avoidance of doubt, the definition of success is defined in Part B of the Letter of Appointment which stipulates that the Plaintiff is deemed to have successfully completed Part 1 of its scope of work upon the plaintiff procuring a formal letter of approval from MABSB. [See Exhibit OCK-4 in Enclosure 13].

Due to the plaintiff’s success in procuring the Letter of Approval, the defendant made payment of RM 150,000.00 to the plaintiff in accordance with Part B of the Letter of Appointment. S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 5

Thereafter, the Plaintiff successfully negotiated and procured MABSB to execute an Offtake Agreement cum En-Block sale and Purchase agreement dated 27-08-2019 ("Offtake Agreement") with the defendant. [See paragraph 11 and Exhibit OCK-3 in Enclosure 13].

Upon execution of the Offtake Agreement, the plaintiff demanded the payment of RM 1,211,250.00 that was due from the defendant pursuant to Part C, Clause 1(ii)(b) of the Letter of Appointment.

The said debt of RM 1,211,250.00 due to the plaintiff was acknowledged and / or verified by the defendant vide two letters of audit confirmation to Messrs Roger Yue & Associates, the auditor for the defendant dated 03-08-2022 and 27-09-2021 respectively. [“Audit Admission Letters”] [See Exhibit OCK-5 in Enclosure 13].

Parties thereafter agreed to revise the sum payable by the defendant to the sum of RM 1,179,450.34 based on the agreed 3% success fee for 50% GDV of the project that was committed by MABSB.

Despite the plaintiff’s demands for payment, the defendant still failed, neglected and / or refused to pay the sum due and owing to the plaintiff.

The defendant contends the Agreement was not validly executed under Section 66 of the Companies Act 2016 as the Agreement was only signed by one director of the plaintiff and one director of the defendant only. [See Defence and Counterclaim paragraph 6]. S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 6

The defendant contends they by mistake paid RM 150,000 as payment for the plaintiff’s success in procuring the Letter of Approval in accordance with Part B paragraph 1 of the Letter of Appointment. [See Defence and Counterclaim paragraph 8].

The defendant contends they are not liable to pay the plaintiff at all and that if the defendant is to pay RM 1,179,450.34 to the plaintiff that will be an unjust enrichment to the plaintiff. [See Defence and Counterclaim paragraphs 13 - 14].

In my view, a court hearing an Order 14 application should take a robust approach and examine carefully to see if sufficient facts and particulars have been given by a defendant to show that there is a triable issue to justify leave to defend. It is not enough for a defendant to give a mere general denial and swear, 'I owe the man nothing'. This is because the burden of proof to show a triable issue is on the defendant.

Further, the court system, not just here but in many jurisdictions overseas, is now inundated with many cases due to the Covid-19 pandemic. If a suitable case can be disposed of by way of a summary judgment application, I will do so as it will assist in clearing the backlog of cases.

In Shell Malaysia Trading Sdn Bhd v Filotek Trading Sdn Bhd [1999] 8 CLJ 592 HC Jeffrey Tan J said - S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 7 Lord Blackburn, in John Wallingford v. Mutual Society [1880] 5 App Cas 685 at 704, thus stressed the importance of an affidavit stating facts which can satisfy the court that there is reasonable ground for the stated defence: I think that when the affidavits are brought forward to raise that defence they must, if I may use the expression, condescend upon particulars. It is not enough to swear, ‘I owe the man nothing’. Doubtless, if it was true, that you owed the man nothing, as you swear, that would be a good defence. But that is not enough. You must satisfy the judge that there is reasonable ground for saying so. So again, if you swear that there was fraud, that will not do. It is difficult to define it, but you must give such an extent of definite facts pointing to the fraud as to satisfy the judge that those are facts which make it reasonable that you should be allowed to raise the defence. Likewise, in O. 14 proceedings, a defendant’s affidavit must “condescend upon particulars” and “should, as far as possible, deal specifically with the plaintiff’s claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on to support it”. The English Supreme Court Practice 1997 vol. 1 para. 14/3 - 4/4 relates furthermore: A mere general denial that the defendant is [not] indebted will not suffice (Wallingford v. Mutual Society [1880] 5 App. Cas. 685, per Lord Blackburn, p 701; Re General Rail Syndicate, Whiteley’s case [1900] 1 Ch. 365, per Lord Lindley M.R., p 369; S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 8 Anon [1875] W.N. 249, per Quain J., p 250) unless the grounds on which the defendant relies on as showing that he is not indebted are stated (ibid). If the affidavit commences with a statement that the defendant is not indebted to the plaintiff in the account claimed, or any part thereof, it should state why the defendant is not so indebted, and state the real nature of the defence relied on (Re General Rail Syndicate, above) [Emphasis added]

After the execution of the Letter of Appointment [See Exhibit OCK-2 in Enclosure 13], the following has taken place.

The plaintiff has negotiated and successfully secured the agreement of MABSB to En-Block purchase 50% of the defendant’s project vide the Letter of Approval. [See Letter of Approval in Exhibit OCK-4 in Enclosure 13]. Payment of RM 150,000 by defendant

The defendant upon the plaintiff’s success paid RM 150,00.00 to the plaintiff in accordance with the terms of the Letter of Appointment.

The plaintiff thereafter successfully negotiated and secured MABSB to enter into an Offtake Agreement with the defendant. [See Offtake Agreement in Exhibit OCK-3 in Enclosure 13]. S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 9

The defendant also acted in accordance with the Offtake Agreement when the defendant made part payment of mobilization fee as stipulated under Clause 5.01(iii)(a) of the Offtake Agreement to MABSB.

The defendant has confirmed and / or verified the debt of RM 1,211,250.00 due to the plaintiff via two letters of audit confirmation to Messrs Roger Yue & Associates, the auditor for the defendant dated 03-08-2022 and 27-09-2021 respectively. [See Exhibit OCK-5 in Enclosure 13].

It is significant that in the Defence at paragraphs 13 - 14 the defendant does not deny the existence or the authenticity of the two Audit Admission Letters.

The plaintiff contends that parties thereafter agreed to revise the debt to a lower sum of RM 1,179,450.34 based on the agreed 3% success fee for 50% GDV of the project that was committed by MABSB.

Thus, I am satisfied based on inter-alia the two Audit Admission Letters the plaintiff has shown it is entitled to a sum of RM 1,179,450.34. Is the defence correct in alleging the Agreement is invalid on the ground it was not validly executed under Section 66 of the Companies Act 2016 as the Agreement was only signed by one director of the S/N m5mMbmqxJ0ivNMQQjsUbTg **Note : Serial number will be used to verify the originality of this document via eFILING portal 10 plaintiff dan one director of the defendant only? [See Defence and Counterclaim paragraph 6].

This is not a triable issue.

In the case before me, it is not the defendant’s contention that the Agreement must be signed under seal.

Section 66 of the Companies Act 2016 only applies to execution of documents which are required under any written law / regulations or agreements to be executed under common seal. It does not apply to execution of documents which are not required under any written law / regulations or agreements to be executed under common seal.

Such is clear from the wording of Section 66 itself which reads: “66 Execution of Documents

A document is executed by a company –

by the affixing of its common seal, subject to the conditions or limitations in the constitution; or

by signature in accordance with this section.

A document is validly executed by a company if it is signed on behalf of the company-S/N m5mMbmqxJ0ivNMQQjsUbTg

by at least two authorized officers, one of whom shall be a director; or

in the case of a sole director, by that director in the presence of a witness who attests the signature.” [Emphasis added] [33] My view is also fortified by the Frequently Asked Questions relating to the Companies Act 2016 that were posted by the Companies Commission Malaysia on 06-03-2017 after the commencement of the Companies Act 2016. [34] In question 3, Part F of the document, the question and the answer were as follows: “3. What is the ambit and scope of section 66 with regards to the execution of documents? Answer: Section 66 should be read in totality to which the scope is intended to cover the execution of documents which are required under any written law / regulations or agreements to be executed under common seal. This means that where there is a requirement under any written law / regulations or agreement requiring the documents to be S/N m5mMbmqxJ0ivNMQQjsUbTg executed by affixing the common seal, the company the following options:

by affixing the common seal in accordance with the conditions or limitations in the constitution; or

by signature in accordance with section 66 i.e. signed by two authorized officers, one of whom must be a director or in the case of a single director, by that director in the presence of a witness. Any document which is executed without a common seal but in accordance with Section 66 would have the same effect as if it was executed under the common seal.” [Emphasis added] Section 64 of the Companies Act 2016 [35] Further, Section 64 of the Companies Act 2016 provides that a contract may be made by a company in 3 ways. An agreement under seal is only one of these 3 ways. [36] Section 64 of the Companies Act 2016 states - “64 Company contracts

A contract may be made –

by a company, in writing under its common seal; S/N m5mMbmqxJ0ivNMQQjsUbTg

on behalf of a company, by a person acting under its authority, express or implied; or

on behalf of a company, orally, by any person acting under its authority, express or implied.

Any formalities required by law in the case of a contract made by an individual shall apply, unless the context otherwise requires, to a contract made by or on behalf of a company.” [Emphasis added] [37] As stated earlier, in the case before me, it is not the defendant’s contention that the Agreement must be signed under seal. [38] Thus, the defence raised is wrongly premised on Section 66 of the Companies Act 2016. In effect, the defendant is clutching at straws in an attempt to evade payment. S/N m5mMbmqxJ0ivNMQQjsUbTg Decision [39] I allow summary judgment as prayed with costs of RM 10,000 subject to allocatur. …………(signed).....……… Leong Wai Hong Judicial Commissioner High Court of Malaya Kuala Lumpur (NCVC 10) Dated: 21th November 2023 COUNSEL: 1) Christopher Ik Chu Jek for plaintiff. (Jim Neoh & Ik (Kuala Lumpur)) 2) Ong Swee Long and Eng Wendy for defendant. (Armiy Rais (Petaling Jaya)) LEGISLATION REFERRED TO: 1) Order 14 of the Rules of Court 2012. 2) Section 64 of the Companies Act 2016. 3) Section 66 of the Companies Act 2016. S/N m5mMbmqxJ0ivNMQQjsUbTg CASES REFERRED TO: 1) John Wallingford v. Mutual Society [1880] 5 App Cas 685. 2) Re General Rail Syndicate, Whiteley’s case [1900] 1 Ch. 365. 3) Shell Malaysia Trading Sdn Bhd v Filotek Trading Sdn Bhd [1999] 8 CLJ 592 HC. 4) Wallingford v. Mutual Society [1880] 5 App. Cas. 685. BOOK REFERRED TO: 1) The English Supreme Court Practice 1997 vol. 1. S/N m5mMbmqxJ0ivNMQQjsUbTg